Economist: V-Shaped Recovery Is Here to Stay

Researchers at Barclays Capital reportedly say there’s little chance of the economic recovery moving from a V-shape to a double dip.

"In terms of global business confidence, an inflexion point seems to have been reached," wrote Barclays’ chief European economist Julian Callow, noting that a return to recession at this point would be historically unusual.

Callow, CNBC reports, says the only example of such a recession occurred in the 1980s when the economy was "driven first by the imposition of credit controls plus the second oil shock, then the Volcker austerity regime.”

"Policymakers do still have sufficient tools at their disposal, and are sufficiently well informed and pragmatic to make sensible decisions,” Callow notes.

“The prospect of a second recession induced by policy error should be mitigated” because central banks can still stimulate demand, making inflation a bigger worry than capital in emerging economies.

In mature economies, however, “large deficits suggest that pro-active fiscal policy has reached the limits of what is possible given current public debt levels," Callow says.

"With interest rates close to the zero bound, this leaves central bank asset purchases as the main remaining stimulus tool."

The recent publication of stress test results in Europe is also a positive, according to Callow, providing further indication that Europe can avoid a double dip.

Former Federal Reserve chairman Alan Greenspan recently told NBC's "Meet The Press" that there was currently a "pause" in the U.S. recovery and said it was possible that the country could fall back into recession.

Researchers at Barclays Capital reportedly say there s little chance of the economic recovery moving from a V-shape to a double dip.
In terms of global business confidence, an inflexion point seems to have been reached, wrote Barclays chief European economist Julian...